DETERMINANTS OF EXPORTS IN KOSOVO: EVIDENCE FROM THE REGRESSION ANALYSIS

While export is something that is shipped or brought to another country to be sold or traded, the strength of economy in a country is sometimes even measured through the export on that said country, or more specifically if the balance trade is in deficit or surplus. Export is the engine of economic growth of the country which introduces new technologies, stimulate demand, encourage savings and accumulates capital. Kosovo is one of the poorest countries in Europe, where one of the concerns about the weak economy is because of negative balance of trade. The biggest obstacle of Kosovans firms remains the trade barriers. The present paper aims to analyze the relationship between the exports with FDI, GDP and remittances in Kosovo. The objective of this paper is to see if FDI, GDP and remittances affect the export in Kosovo, and if this effect is positive or negative. In the present paper, a regression analysis is executed with time series data from 2004 until 2019. The literature review section shows previous work of authors who have worked and researched export and trade with different variables. From these researches we have selected some variables that might affect export such as foreign direct investment, GDP and remittances, thus, they were the one chosen. The data was first taken in figures of millions of $ but later were transformed in first difference. To check how those variables effect the exports, a least square regression was performed, in which it was found that foreign direct investments have a positive but not statistically significant effect. Whereas, remittances have a negative and not statistically significant effect in exports. In contrast to those, GDP is found to be positive and statistically significant. Further tests that were employed to check the fit of the model were also heteroscedasticity, mulitcollinearity and normality tests.